HourlyNerd, a two-sided marketplace platform for matching freelance consultants with small companies looking for help, struggles to define a growth plan for the future. The company, started as a class project in HBS' FIELD 3 course, is assessing three growth paths: shifting their target from small and medium sized businesses to enterprise customers, expanding into new verticals to become the Amazon of freelance labor, and transforming its business model from a marketplace to software-as-a-service (SaaS). Each of the three paths was risky and required financial and human resource investment. Could and should the fledgling startup change its business model? Could they fundamentally change the way companies purchased consulting services? Or, should the founders play it safe by remaining focused on executing their original business model -- a proven winner?
Swot Analysis of "HourlyNerd" written by Jill Avery, Joseph Fuller includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Hourlynerd Freelance facing as an external strategic factors. Some of the topics covered in HourlyNerd case study are - Strategic Management Strategies, Venture capital and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the HourlyNerd casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, central banks are concerned over increasing inflation, wage bills are increasing, competitive advantages are harder to sustain because of technology dispersion, there is increasing trade war between United States & China, increasing household debt because of falling income levels, cloud computing is disrupting traditional business models,
supply chains are disrupted by pandemic , customer relationship management is fast transforming because of increasing concerns over data privacy, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in HourlyNerd case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Hourlynerd Freelance, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Hourlynerd Freelance operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of HourlyNerd can be done for the following purposes –
1. Strategic planning using facts provided in HourlyNerd case study
2. Improving business portfolio management of Hourlynerd Freelance
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Hourlynerd Freelance
Strengths HourlyNerd | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Hourlynerd Freelance in HourlyNerd Harvard Business Review case study are -
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– HourlyNerd firm has clearly differentiated products in the market place. This has enabled Hourlynerd Freelance to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Hourlynerd Freelance to invest into research and development (R&D) and innovation.
Innovation driven organization
– Hourlynerd Freelance is one of the most innovative firm in sector. Manager in HourlyNerd Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Diverse revenue streams
– Hourlynerd Freelance is present in almost all the verticals within the industry. This has provided firm in HourlyNerd case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Analytics focus
– Hourlynerd Freelance is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Jill Avery, Joseph Fuller can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Hourlynerd Freelance digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Hourlynerd Freelance has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Ability to lead change in Innovation & Entrepreneurship field
– Hourlynerd Freelance is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Hourlynerd Freelance in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Ability to recruit top talent
– Hourlynerd Freelance is one of the leading recruiters in the industry. Managers in the HourlyNerd are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Low bargaining power of suppliers
– Suppliers of Hourlynerd Freelance in the sector have low bargaining power. HourlyNerd has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Hourlynerd Freelance to manage not only supply disruptions but also source products at highly competitive prices.
Effective Research and Development (R&D)
– Hourlynerd Freelance has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study HourlyNerd - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Learning organization
- Hourlynerd Freelance is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Hourlynerd Freelance is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in HourlyNerd Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High brand equity
– Hourlynerd Freelance has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Hourlynerd Freelance to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Organizational Resilience of Hourlynerd Freelance
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Hourlynerd Freelance does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses HourlyNerd | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of HourlyNerd are -
Lack of clear differentiation of Hourlynerd Freelance products
– To increase the profitability and margins on the products, Hourlynerd Freelance needs to provide more differentiated products than what it is currently offering in the marketplace.
High cash cycle compare to competitors
Hourlynerd Freelance has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Skills based hiring
– The stress on hiring functional specialists at Hourlynerd Freelance has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the HourlyNerd HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Hourlynerd Freelance has relatively successful track record of launching new products.
Workers concerns about automation
– As automation is fast increasing in the segment, Hourlynerd Freelance needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Low market penetration in new markets
– Outside its home market of Hourlynerd Freelance, firm in the HBR case study HourlyNerd needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High operating costs
– Compare to the competitors, firm in the HBR case study HourlyNerd has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Hourlynerd Freelance 's lucrative customers.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Hourlynerd Freelance is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study HourlyNerd can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High bargaining power of channel partners
– Because of the regulatory requirements, Jill Avery, Joseph Fuller suggests that, Hourlynerd Freelance is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Interest costs
– Compare to the competition, Hourlynerd Freelance has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study HourlyNerd, is just above the industry average. Hourlynerd Freelance needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Opportunities HourlyNerd | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study HourlyNerd are -
Developing new processes and practices
– Hourlynerd Freelance can develop new processes and procedures in Innovation & Entrepreneurship industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Hourlynerd Freelance can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Building a culture of innovation
– managers at Hourlynerd Freelance can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Innovation & Entrepreneurship segment.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Innovation & Entrepreneurship industry, but it has also influenced the consumer preferences. Hourlynerd Freelance can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Learning at scale
– Online learning technologies has now opened space for Hourlynerd Freelance to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Hourlynerd Freelance can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, HourlyNerd, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Creating value in data economy
– The success of analytics program of Hourlynerd Freelance has opened avenues for new revenue streams for the organization in the industry. This can help Hourlynerd Freelance to build a more holistic ecosystem as suggested in the HourlyNerd case study. Hourlynerd Freelance can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Hourlynerd Freelance can use these opportunities to build new business models that can help the communities that Hourlynerd Freelance operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Hourlynerd Freelance can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Hourlynerd Freelance in the consumer business. Now Hourlynerd Freelance can target international markets with far fewer capital restrictions requirements than the existing system.
Using analytics as competitive advantage
– Hourlynerd Freelance has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study HourlyNerd - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Hourlynerd Freelance to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Loyalty marketing
– Hourlynerd Freelance has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Hourlynerd Freelance can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats HourlyNerd External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study HourlyNerd are -
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Hourlynerd Freelance will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Consumer confidence and its impact on Hourlynerd Freelance demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Technology acceleration in Forth Industrial Revolution
– Hourlynerd Freelance has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Hourlynerd Freelance needs to keep up with the evolution of technology in the Innovation & Entrepreneurship sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Hourlynerd Freelance with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Hourlynerd Freelance can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study HourlyNerd .
Shortening product life cycle
– it is one of the major threat that Hourlynerd Freelance is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Regulatory challenges
– Hourlynerd Freelance needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Innovation & Entrepreneurship industry regulations.
Stagnating economy with rate increase
– Hourlynerd Freelance can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
High dependence on third party suppliers
– Hourlynerd Freelance high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Hourlynerd Freelance in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study HourlyNerd, Hourlynerd Freelance may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Innovation & Entrepreneurship .
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Weighted SWOT Analysis of HourlyNerd Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study HourlyNerd needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study HourlyNerd is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study HourlyNerd is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of HourlyNerd is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Hourlynerd Freelance needs to make to build a sustainable competitive advantage.